Paying hotel bills and offering tickets to football and international rugby matches is part of corporate life, Goldman Sachs has told the high court, as the bank lays out its defence against a $1.2bn (£850m) claim by a Libyan investment fund set up during the Gaddafi era.
The Libyan Investment Authority (LIA) argues that Goldman and its bankers attempted to exert influence over its investment decisions by paying hotel bills and offering corporate hospitality.
Robert Miles QC told Mrs Justice Rose that corporate hospitality was “part of the ordinary influences of commercial life”. He said the corporate hospitality Goldman is said to offered – tickets to the Rugby World Cup and Champions League finals – were not lavish in comparison to what other banks were offering the LIA. He read out an email in which an LIA official asked HSBC to provide hotel accommodation.
The LIA has also made claims that a Goldman banker, Youseff Kabbaj, procured prostitutes as part of his efforts to win access to the fund. Goldman’s QC did not address these allegations. Kabbaj, the court has been told, has agreed a $4.5m settlement with Goldman and will not give evidence.
Miles said it would be a travesty to say that Goldman had misled the LIA, which argues that its staff did not understand the detail of the loss-making trades that took place between January and April 2008, and which are at the centre of the claim.
“The question is what they were capable of understanding and what they did understand. If it turns out they didn’t understand it’s not through any fault of [Goldman],” he said.
He also disputed the idea that Kabbaj was able to exert influence at the LIA, which had dealings with 77 financial institutions and had refused to take part in one deal involving the head office of the Spanish bank Santander. “This idea he had them under his thumb will not wash,” Miles said.
The case is expected to last seven weeks and the first witnesses are due to be called on Thursday. The court was told that Sofia Blount, nee Wellesley, the wife of the pop singer James Blunt and who used to work as a PA at the LIA, would not give evidence. Roger Masefield QC, representing the LIA, told the court she was not being called because of “media intrusion”.
The LIA’s skeleton argument presented to the court earlier in the week had set out how Kabbaj took Haitem Zarti, the brother of an LIA official, on holidays to Morocco. “Mr Kabbaj also took him to Dubai for a conference, with the business-class flights and five-star accommodation being paid by Goldman Sachs. Documents disclosed by Goldman Sachs show that during that trip Mr Kabbaj went so far as to arrange for a pair of prostitutes to entertain them both one evening,” the LIA said.
Goldman said the claim was one of buyers’ remorse. “The LIA was the victim of an unforeseen financial depression, not of any wrongdoing by [Goldman],” the bank said.
This article was written by Jill Treanor, for theguardian.com on Wednesday 15th June 2016 17.32 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010